The Big Mobile Ad Push: What are the Implications of the Criteo Acquisition of In-App Targeting Specialist, AD-X?

There's been a raft of acquisitions this week in the mobile space, as traditional ad nets and digital advertising vendors look to bulk up their mobile offerings. The most interesting of all these "acqui-hires" was the AD-X acquisition by Paris-based retargeting behemoth, Criteo. Criteo is rumoured to be IPO'ing in the last quarter of this year. Although, even it realises that going public with just a desktop retargeting solution would not sit well with institutional investors - and inevitably questions of mobile strategy will need to be addressed. Can retargeting be executed on mobile? With this acquisition, clearly Criteo thinks it can be done. By leveraging in-app data, Criteo should be able to bypass the issues around third-party cookies being blocked by the likes of Apple. This is pretty significant, and has big implications for the mobile ad ecosystem. Could Criteo bring new DR ecommerce spend to mobile? ExchangeWire asked three senior ad execs - MEDIA iQ's Paul Silver, Adbrain's Gareth Davies, MoPub's Jim Payne - about the significance of this acquisition, and the effect it is likely to have on the mobile ad space.

IMG 2Paul Silver, Global Strategy Director, MEDIA iQ

The more savvy amongst us would have seen an acquisition of this sort coming. It heralds an era where mobile app advertising is about to become much more aligned to the way app owners leverage analytics to understand their audience’s core in-app behaviours.

Device ID will now be much more under the lens. Using it as a proxy, in the same way a cookie-based user ID in desktop is employed, to collect, segment and model, means advertisers and agencies will now start realising that mobile app-based advertising poses a significant proposition. Given the granularity that app tracking vendors (such as AD-X) track to, this means that (for the companies that have developed the appropriate analytical and modelling frameworks) we will soon be replicating exactly what we do in a desktop-driven world with what we can execute on a mobile device. Over the next six months, I think we will certainly see a shift away from the current incumbents dominating the conversation around data-driven mobile advertising. This could become a catalyst for many others to quickly enter the space. What’s more, the concept of CRM and Customer Lifecycle Management becomes arguably much easier to put into practice, so long as you can integrate and segment against raw device ID data points.

A concern will inevitably arise as to whether the usage of this personalised level of data will be respected. Codes of conduct on how we use non-PII, and certainly personal-level data, must become standardised across both desktop and mobile (regardless if you are using a cookie or a Device ID). I also believe this will become more pertinent for app owners whose apps are more transactional by nature. Whilst understanding a user’s transactional behaviour is seen as the holy grail to some (from a CRM perspective), we have to respect the responsibility of having access to that.

Lastly, many may ask why now and why would Criteo not build it themselves? Speed and access to an impressive client base must surely be the motivation here. That and the fact they quickly have a ‘mobile play', which no doubt pleases the investment community on the IPO run in.

small Gareth Davies (640x457)Gareth Davies, CEO, Adbrain

Criteo’s recent acquisition of AD-X is a bold and telling move for the king of retargeting. Bold, as they’re future-proofing their business in a rapidly evolving mobile-first world, where consumer engagement and ecommerce is shifting rapidly from desktop to smartphones and tablets. Telling, because despite the size and scale of Criteo’s engineering and product teams, they have opted to buy in. Let’s face it, mobile is still no easy game.

Mobile tracking and conversion attribution remains a real challenge for advertisers looking to reach their increasingly mobile and multi-screen consumers. AD-X have been one of the early players alongside Apptimiser (Somo), Has Offers and Appsflyer to address this problem, most notably in the mobile app download space, providing much needed insight into paid app download campaigns and key metrics such as Cost per Download and lifetime value by publisher or ad network. No wonder Criteo have been keen to bring this innovation, data and insight in-house.

I’ll be interested to watch how they integrate this technology and know-how into their desktop, cookie-driven RTB media operations, whilst respecting confidential AD-X client data, including first-party CRM data used to tie lifetime value back to mobile conversion data.

On the programmatic front, clearly mobile RTB represents a huge opportunity for traditional desktop retargeting and RTB players, but have no doubt, big challenges lie ahead. At Adbrain, we’re focused on exactly this problem - leveraging billions of rich mobile, tablet and desktop data sets to create a single customer view for intelligent real-time audience buying. We believe this is a big data problem that needs a careful blend of science, engineering and a true commitment to transparency, allowing customers to own their data, empowering them to use it for smarter programmatic media buying.

However this plays out, Criteo have done well to move quickly. No doubt their desktop counterparts are scrambling to up the ante and double down on their mobile product capabilities, which will only lead to greater innovation. Great news for all of us in the mobile and digital space!

MoPub CEO Jim Payne - Headshot (541x640)Jim Payne, CEO at MoPub

Criteo’s acquisition of AD-X is significant - it gets them access to a large share of performance marketers in mobile in a single shot. Performance marketing in mobile is largely driving app installs. It’s a book of business that doesn’t overlap with Criteo’s existing desktop display business. Criteo’s acquisition of AD-X indicates that they are taking mobile seriously and that they want to move quickly.

Mobile retargeting is still a wide-open field. Historically, mobile ad networks have focused on delivering app installations by backing out a Cost per Installation (CPI) price into a low CPC price and buying cheap Android and iOS inventory from whatever supply source they can. There was not much science behind who did or did not get shown an ad. The end product was an app installed on a smartphone that would more than likely not get used. The new breed of mobile DSP has now challenged that model by taking the commercial risk and buying across the rapidly growing pool of mobile RTB inventory on a CPM basis. Here, algorithms make thousands of decisions every second around whether to bid or not bid for an ad request coming from a mobile RTB-enabled ad space. These algorithms take into account historical information and statistical models as part of their bidding strategies.

There are a number of emerging models coming into play, namely Customer Lifetime Value, Retargeting and Cross-Channel. These new models for mobile promise to deliver significant value for advertisers by placing ads in more relevant ad spaces, leading to higher value customers (versus the random placement described in the mobile ad network scenario).

With this acquisition, Criteo gains access to AD-X’s set of performance marketers, and also gives them a channel to offer Criteo’s own marketing services to them. It’s a wise move and they will be able to make an even bigger impact in the space faster as a result.